Learning Brief 1: The business case for digitally-enabled smallholder finance

Published on

December 12, 2016

The Learning Lab's second deep dive exercise* is exploring the business case for smallholder finance, in particular the role of digital approaches in making it possible to profitably serve this market at scale. So far it has yielded a workshop presentation and now our first Learning Brief, "The business case for digitally-enabled smallholder finance."  

[Download Learning Brief 1]

New digital technologies and innovative business models are making it possible to provide credit to smallholder farmers (SHFs) in Africa.  As a host of digital technologies emerge along the lending value chain, a new generation of technology-enabled business approaches is bringing large segments of the population into the addressable market and doing so cost-efficiently. 

This 16-page brief looks at where and how innovations in digital technology promise to enable financial service providers (FSPs) to serve smallholders at scale. Our goal is to equip practitioners — including providers of financial services, technical assistance and capital, and B2B digital service providers (DSPs) — with insights for designing and scaling credit solutions for smallholders, by (1) increasing transparency concerning the viability of digitally-enabled models for financing smallholders and (2) laying the groundwork for further research and data gathering from FSPs that are using digital technology.

This brief draws on a new survey of 23 selected FSPs in Africa who have begun their "digital journey", as well as extensive desk research and interviews with a cross-section of digital smallholder finance sector donors, implementers, and entrepreneurs.  It explores how FSPs are digitalizing their lending operations and early indications of the value they see, touches briefly on the customer perspective of these digital approaches, and then analyzes the challenges to going digital, providing recommendations for advancing digitalization in the sector.

Authorship: Dalberg Global Development Advisors (Dalberg) led this research under guidance of the Rural and Agricultural Finance Learning Lab (the Lab). The authors would like to acknowledge and thank the sponsor of this work — The MasterCard Foundation — for providing significant and substantive input, guidance, and leadership for this project. 

*Note: The Lab's first "deep dive" exercise explored the impact case for rural and agricultural finance, resulting in a literature review and the Lab's report on Understanding Impact.  

About the Author(s)

Original Content

The Learning Lab works to identify and share knowledge relevant to our learning agenda and our users, but also to create new knowledge through research and facilitated learning. Original content from the Learning Lab includes news about the Lab, analyses we've conducted, knowledge products we've created, and posts we've written about other relevant initiatives.

Learning Lab Implementing Partner

Dalberg is a strategic advisory firm specializing in international development and global challenges. They have extensive expertise in rural and agricultural finance, including having authored the landmark study Catalyzing Smallholder Finance 

Dalberg jointly implements the Learning Lab with GDI, conducting "deep dive" studies for the Fund for Rural Prosperity as well as the MasterCard Foundation's rural and agricultural finance portfolio. On raflearning.org, Dalberg also shares knowledge and learnings from outside of its work with the Lab.

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